The high New Zealand dollar has forced Fonterra to cut its forecast payout range for 2013 by 30 cents to between $5.65 and $5.75.
Fonterra says though prices rose at the recent global dairy auction, the high dollar is eroding any gains.
BNZ economist Doug Steel says the revised forecast is no surprise, but it will have a significant impact on the economy.
"Compared to the previous forecast, we've put it in the vicinity of $500 million," he says.
"it's a round a quarter of 1% of GDP - a reasonable hit".